LONDON (dpa-AFX) - US-based drug maker Pfizer Inc. (PFE) Monday said it is currently considering its options with respect to UK-based peer AstraZeneca Plc. (AZN, AZN.L), after two failed approaches. AstraZeneca's stock added close to 15 percent in early morning trade.
Considering recent market developments, Pfizer contacted AstraZeneca on April 26, seeking to renew discussions to develop a proposal that could be recommended by both companies to their shareholders. AstraZeneca again declined to engage.
Pfizer had submitted a preliminary, non-binding indication of interest to the board of directors of AstraZeneca in January regarding a possible merger.
The proposal included a combination of cash and shares in the combined entity which represented an indicative value of 46.61 pounds or $76.62 per AstraZeneca share and a premium of around 30 percent to AstraZeneca's closing share price of 35.86 pounds on January 3. A deal is said to be valued at $98.7 billion.
After limited high-level discussions, AstraZeneca had declined to pursue discussions, which were discontinued on January 14 and Pfizer ceased to consider a possible transaction.
Pfizer said it is now considering a possible transaction in which AstraZeneca shareholders will receive a significant premium for their shares, to be paid in a combination of cash and shares in the combined entity.
The combined entity will have an industry-leading portfolio of molecularly targeted medicines for lung cancer. It will have strengthened presence in breast cancer and opportunities for greater depth in immuno-oncology.
Ian Read, Chairman and CEO of Pfizer, said, 'The combination would complement our two innovative businesses and our Global Established Pharmaceutical business, allowing us to maintain the flexibility for the potential future separation of our businesses whilst at the same time broadening our pipeline breadth and potential new product launches over coming years.'
The possible transaction is expected to add to Pfizer's adjusted earnings per share in the first full year following the combination.
The transaction is expected to result in the combination of the two companies under a new U.K.-incorporated holding company.
Pfizer expects the combined company to have management in both the U.S. and the U.K., and to maintain head offices in New York and list its shares on the New York Stock Exchange.
Any firm offer will be subject to satisfactory completion of a customary due diligence review by Pfizer and unanimous recommendation by the directors of AstraZeneca to vote in favor of the combination.
It is also subject to the directors of AstraZeneca giving irrevocable undertakings to accept any offer in respect of their AstraZeneca shares.
Pfizer is expected to announce a firm intention to make an offer for AstraZeneca, or to announce that it does not intend to make an offer, by May 26.
AZN.L is currently up 14.6 percent at 4,676 pence.
PFE closed marginally higher at $30.75 on Friday.
Copyright RTT News/dpa-AFX